Rising Oil Prices Weaken African Currencies, Deepen Inflation Risks Across the Continent
African economies are facing a sharp financial strain as global oil prices surge by over 50 percent, pushing crude above $100 per barrel amid the ongoing US-Israel-Iran conflict. The African Union (AU) and African Development Bank (AfDB) report that at least 29 African currencies have weakened, increasing the cost of repaying external debt and importing essential goods such as food, fuel, and fertiliser. The sudden spike threatens to reverse gains in disinflation and erode household purchasing power across the continent.
The report warns that the economic shock is spreading faster and through more concentrated channels than previous disruptions. Households and businesses are already feeling the effects, with rising fuel prices feeding into higher transport and production costs. Countries heavily dependent on imports, including Senegal, Sudan, Cabo Verde, South Sudan, and The Gambia, are expected to face the most acute fiscal pressure, highlighting the vulnerability of nations with weak foreign reserves and large debt burdens.
One of the most pressing concerns is the effect on agriculture. Disruptions in Gulf energy supplies threaten access to ammonia and urea during the critical March–May planting season. Reduced fertiliser availability could drive up food prices and deepen food insecurity, particularly for low-income households in import-dependent economies. Analysts warn that the fertiliser shortage may prove even more disruptive than the oil price shock itself, with potentially severe consequences for Africa’s agricultural output.
If the Middle East conflict continues beyond six months, the AU and AfDB project a decline of at least 0.2 percentage points in Africa’s GDP growth, which was previously expected to reach 4.0 percent in 2026. The continent’s exposure to global shipping disruptions and energy supply risks could trigger a broader cost-of-living crisis. Fragile states such as Sudan, Somalia, and Libya may face heightened instability, while geopolitical competition from powers like the US, China, Russia, and Gulf nations could intensify.
The AU and AfDB emphasize the need for swift and coordinated action. Immediate measures include targeted subsidies and interventions to ease pressure on fuel, food, and fertiliser markets. Over the medium term, African governments are urged to strengthen energy security, expand social protection, and boost intra-African trade under the African Continental Free Trade Area. Long-term resilience will depend on structural reforms, including domestic resource mobilisation, deeper capital markets, and innovative financing solutions such as diaspora bonds and blended finance.
source: Business day